SPDR Gold Shares (GLD ETF)

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Gold Market Overview

By leaving out weekly fuss, the Gold Market Overview reports enable you to see fundamental changes on the gold market in monthly format. The monthly report reveals what will drive the price of gold in the future and helps you to focus on the most important changes. Market Overview reports will make sure that you don't miss the forest for the trees.

The first month of 2018 is behind us. It was exciting period for the gold market, as the shiny metal jumped again above $1,300. The two most important macroeconomic themes in January were the so-called Great Unwind of the central banks’ balance sheets and the weakening U.S. dollar.

In this edition of the Market Overview, we will focus on these key issues. First, we will examine what the Great Unwind implies for the U.S. dollar and gold. In a response to the Great Recession, the major central banks boosted their balance sheets. A decade later, there is a strong economic growth momentum, so we head into the Great Unwind. The tightening of monetary policy and higher interest rates could be negative for gold, but more hawkish BoJ and ECB would mean narrower divergence in monetary policies between the Fed and other major central banks.

Second, we will expand our analysis on the future of the greenback. In particular, we will answer the question of why the American currency has been falling like a stone recently, despite the Fed’s tightening cycle. We will also explore the historical bull and bear cycles in both the U.S. dollar and gold. As the yellow metal has a strong negative correlation with the greenback (and the usual relationship between the gold prices and real interest rates broke down temporarily), the trend in this currency is likely to be the vital driver in the gold market in 2018.

This was another fascinating year. Perhaps it was not as eventful as 2016 (when the Brexit referendum and Trump’s triumph in the presidential election happened), but it was still very interesting. Trump officially became the President of the United States, while Emmanuel Macron won the French elections. Later this year, Trump almost unleashed nuclear war on the North Korea. And the cryptocurrencies rallied at the end of 2017, drawing the attention of the world. The last year was also a time of changes within the Fed – Powell was nominated as Yellen’s successor. But generally it was a rather politically calm and economically positive year, despite the natural disasters, which may explain the modest gains in the gold market. The conflict over North Korea did not explode, the U.S. stock market continued its upward move, and the Fed gradually tightened its monetary policy. The global economic growth accelerated and became more synchronized.

In this edition of the Market Overview, we will summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the New Year. We will also present our gold outlook for 2018, presenting the base scenario and examining some black swans or potential triggers for the rally in the gold prices. We will focus on the impact of the macroeconomic trends, the Fed’s monetary policy and the U.S. dollar value on the price of gold. Given that in the long run the gold trade is generally about the confidence in the greenback, the fate of this currency may be the biggest driver in the gold market next year.

In the last edition of the Market Overview, we analyzed the candidates for the next Fed’s Chair. In line with our prediction, Trump nominated Jerome Powell for this position. Hence, in this issue next, we examine in detail what the Yellen’s replacement by Powell implies for the gold market. We will also discuss the Taylor Rule and its impact on the yellow metal in a more detailed way. There is still a long way to implement a more rule-based policy by the Fed, but investors should be prepared, especially if John Taylor joins the FOMC. And as the U.S. central bank started unwinding its balance sheet in October, we will analyze its hitherto and potential impact on the financial markets and the price of gold. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last quarter and what investors should expect in the last month of the year. In particular, we will address the recent flattening of the yield curve and whether it will support bullion prices.

In the special part of the current edition of the Market Overview, which has been already released, we have analyzed who, among the five candidates, would be the best and the worst for the gold market as the next Fed Chair. In the rest of the report, we will focus on the “mystery of lacking inflation” and its implication for the gold market. We will also examine the potential effects of lowering the inflation target by the Fed or of adopting a more rule-based approach, in line with Taylor’s ideas. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month and what investors should expect in the last two months of the year. In particular, we will analyze whether the December curse is likely to happen, i.e. whether the gold will bottom in the last month of the year, as it did in both 2015 and 2016.

President Trump is to announce the next chair of the Federal Reserve soon. We invite you to read our today’s article about the candidates for the Fed Chair and find out who will be the best (and who the worst) for the gold market.

In the last edition of the Market Overview, we focused on the economic rebound in the Eurozone and geopolitical threats from North Korea. In this issue of our report, we stay in Asia, as we will analyze the link between the Chinese currency and gold. We will also examine China’s role in the gold market, as well as the recent developments in the China’s economy. Last but not least, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last quarter and what investors should expect in the last three months of the year.

In the last edition of the Market Overview, we noted that “Europe has recently been among the most surprising positive economic regions in the world.” In this issue of our report, we will, as usual, provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month and whether the sideways trend in the gold market will finally end, given the recent gold’s jump above $1,300. We will focus on the current developments in the Old Continent, examining in detail whether the Eurozone economy has really accelerated and, if yes, what it implies for the gold market. We will also study how the yellow metal has reacted historically to threats from North Korea – such an analysis should help investors to take appropriate positions in the gold market during the elevated tensions between the U.S. and North Korea.

In the last edition of the Market Overview, we analyzed the investment potential of platinum and palladium. We noted that the decline in diesel vehicles and the growth of electric cars could disrupt the demand for both these metals. In this issue of our report, we will dig into this topic, examining in detail how the looming changes in the automotive industry are likely to affect the precious metals. Last but not least, we will also provide investors with an update on recent fundamental drivers of the gold market, answering the question of how the medium-term outlook for the gold market has changed over the last month. In particular, we will focus on the recent hawkish shift among the major central banks in the world.

Investing in precious metals is generally associated with gold and silver. However, this group of chemical elements also includes the platinum-group metals, of which platinum and palladium are the most widely traded. This is why in this edition of the Market Overview we will analyze the investment potential of these two precious metals. To achieve this goal, we will examine the demand and supply outlook for these white metals and the pros and cons of adding them to one’s precious metals portfolio.

We also provide investors with an update on recent fundamental drivers of the gold market, answering the question how the medium-term outlook for the gold market has changed over the last month. In particular, we will summarize the first half of 2017 in the gold market from the perspective of its fundamentals. This analysis should help investors draw investment conclusions for the remainder of the year.

In the previous edition of the Market Overview, we pointed out that “geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market.” However, the French presidential election was a turning point for the yellow metal, which started to decline after centrist Emmanuel Macron triumphed in the first round. Gold lost about 4.8 percent between April 21 and May 9, when the recent rally has begun. Does it mean more bearish outlook for the gold market?

In this edition of the Market Overview, we will provide an investors update on recent fundamental drivers of the gold market, answering the question how the medium-term outlook for the gold market has changed over the last month. In particular, we will outline a macroeconomic outlook in the context of a ‘reflation debate’. Is reflation coming or was the recent uptick in inflation only temporary? We will also analyze geopolitical changes and their possible implications for the gold market, focusing on the impact of diminished risk premium on the yellow metal. We will also examine how the EUR/JPY exchange rate can affect the price of gold, as some analysts point out the negative correlation between this cross rate and gold price. And finally, we will find out whether gold mining production has peaked and whether it is important for gold investors at all.

In the first quarter of 2017 gold gained about 9 percent. In April, the yellow metal continued its rally due to the uncertainty about French elections and due to rising tensions about Syria and North Korea. Geopolitical risks clearly won with a hawkish Fed in a tug of war in the gold market. Does it mean more bullish outlook for the gold market?

In this edition of the Market Overview, we will provide investors update on recent fundamental drivers of the gold market. In particular, we will analyze the most important geopolitical developments – such as presidential elections in France, the formal triggering of Brexit and changes in Trump’s stance – and their possible implications for the gold market. We will also examine the macroeconomic front, focusing on the receding ‘Trump rally’ and the Fed’s plans to shrink its balance sheet. How has the medium-term outlook for the gold market changed over the last month?

Gold started well this year: it rallied about 9 percent in the first quarter of 2017 (and about 11 percent from the bottom at the end of December 2016). Has it entered a bull market, or have we just witnessed a correction before the storm? On the one hand, fundamental factors remain rather negative for the yellow metal over the medium-term. However, gold prices have recently shown a remarkable resilience to hawkish comments and actions from the Fed. What does it mean for the gold market and which way will gold go?

In this edition of the Market Overview, we will dig into several important changes which have happened since our latest update. In particular, we will analyze the impact of the March FOMC meeting on the yellow metal. We will also examine the Trump’s recent actions, as well as geopolitical developments in Europe, and their potential implications for the price of gold. Last but not least, we will summarize the first quarter in the gold market from the perspective of its fundamentals. This analysis should help investors draw investment conclusions for the remaining part of the year.

In January, Gold prices were in an upward trend as investors hedged against uncertainty about Trump’s policies. On the other hand, the macroeconomic picture seems to be rather negative for the yellow metal in the medium term. Which driver will prevail?

In this edition of the Market Overview, we will focus on the interplay of different factors on the gold market. Will gold shine as a safe-haven asset thanks to political uncertainty about Trump’s actions, and the downward risks in Europe (such as elections in France and Germany)? Or will we see acceleration in global growth led by the United States and see Fed tightening which will send gold prices south? Are we witnessing the replay of 2016 in the gold market, when the price of the yellow metal soared in the first quarter, or was the January rally only a correction in a bear market?

Reflation has been one of the keywords for the markets in the last few months. More and more signals indicate that inflation is beginning to rise all over the world. What does it mean for the global economy and the gold market?

In this edition of the Market Overview, we will analyze the gold’s performance in the reflationary scenario. We will examine what is happening in markets right now and if such inflation is really coming. We will also delve into the causes of the current inflationary trends – are they rooted in Trumponomics and Great Fiscal Rotation only or are they independent from them? Are they merely temporary developments or lasting tendencies? Will the comeback of inflation be positive or negative for the global economy and the gold market? Is stagflation a new threat for the world and an opportunity for the yellow metal?

In this edition of the Market Overview, we will summarize the last year in the gold market from the perspective of its fundamentals. This analysis should help investors better understand the gold market, and draw investment conclusions for the new year. We will also present our gold outlook for 2017, focusing on the impact of the Fed’s rise and Trump’s policies on the price of gold. Given that in the long run the gold trade is generally about the Fed’s actions and confidence in the U.S. economy, the path of interest rates may be the biggest driver in the gold market in the next year.

Ladies and Gentleman, Donald J. Trump has been elected the 45th president of the United States! Who would have thought that a real estate mogul without political experience would win the U.S. presidential election? But this really happened, becoming the next big shock after the surprising decision of Britons to exit the European Union. Talking heads will be analyzing for months why Trump won. Some argue that Hillary Clinton was a bad choice for Democrats (she is the personification of the establishment and all the scandals around her did not help); others point out the revolt against a corrupted system and elites, political correctness and globalization; the special character of social media which paved Trump’s way for the presidency; or that Trump just listened to the American people, especially forgotten men and women from Middle America.

In this edition of the Market Overview, we will focus not on causes, but on consequences of the Trump’s presidency for the global economy and the gold market. Most analysts believed that gold should benefit from Trump’s victory, however gold’s response to his success calls this thesis into question (we mean not the initial move in the election evening, but the following developments). We will discuss how Trump could affect U.S. monetary policy and analyze his agenda, including the first 100 days, and its potential effects for the precious metals. Will the boosted infrastructure spending and tax cuts widen the fiscal deficit and weaken confidence in the U.S. dollar, or spur economic growth and cause inflation? Will Trump’s trade and foreign policies result in geopolitical chaos and recession? Will gold benefit from the upcoming presidency as an inflation hedge, safe haven and a bet against the greenback? Or will Trump revive the economy, but without triggering the negative consequences mentioned above? Will the gold prices fall? Or perhaps Trump's policies will turn out to be irrelevant for the gold market.

On the same day in September, two of the world’s major central banks held very important but very different monetary policy meetings. The Fed again did nothing, while the Bank of Japan (BoJ) adopted another non-standard policy measures. Anyway, both central banks continue their unconventional strategies, despite strong evidence that they have been failing. The current U.S. recovery is the worst since the WWII, in spite of all the rounds of quantitative easing and zero interest rate policy. The case of Japan is even more depressing, as the country has been stuck in a sluggish growth for the last 26 years, despite quantitative easing, ZIRP and NIRP.

In this edition of the Market Overview, we will focus on the relationship between the Bank of Japan’s actions and gold. In particular, we will discuss the recent changes in the BoJ’s monetary policy framework and their consequences for the precious metals market. It is always worth analyzing the BoJ’s measures, as they are often copied by the Fed. We will also analyze the link between the yellow metal and the yen, as there is a growing conviction that both assets behave like safe havens.

The Great Recession prompted central banks to adopt non-standard policies like quantitative easing and zero interest rates. The effectiveness of these tools in stimulating private credit expansion and economic growth is increasingly being questioned. Since more and more central bankers declare that the natural interest rate is lower than previously thought, some economists and policymakers argue that monetary policy should be even more unconventional. For example, according to San Francisco Fed President John Williams, a lower natural rate implies that “conventional monetary policy has less room to stimulate the economy during an economic downturn”.

In this edition of the Market Overview we will discuss which tools affecting inflation and real activity do the central banks have left. We will examine thoroughly the most debated innovative instruments, such as helicopter money, and consider how these ‘non-standard unconventional’ tools affect the economy and the gold market. It is quite unlikely that they will be introduced in the U.S. right now, but they may be only one recession away from us. This is why we decided to analyze them – quantitative easing was only an academic curiosity, once. We will also analyze recent propositions to change current monetary policy framework by increasing the inflation target or by replacing it by price level or nominal GDP targeting. Last but not least, we will address briefly the policy of targeting the long-term interest rates, introduced last month by the Bank of Japan. Investors should not ignore the change of its monetary policy framework as history teaches us that many of the unconventional tools adopted by the BoJ have been later adopter by other central banks, including the Fed. How would these proposals, if implemented in the U.S., influence the precious metals market? What's the true link between unconventional monetary policy and gold?

As the British referendum is behind us, the most important political risk is the outcome of the U.S. presidential election. This is why in this edition of the Market Overview, we will discuss its impact on the gold market in more detail. We will present the theory of the presidential election cycle and examine how the shiny metal performed in recent presidential election years. We will also analyze how gold behaved during different presidential terms and study whether the governing party matters for the bullion market. And of course we will apply the conclusions from our historical analysis to the current race to the White House between Donald Trump and Hillary Clinton.

In this edition of the Market Overview, we will discuss the Brexit vote in more detail. We will examine the reasons behind such an outcome and its consequences for the U.S. economy and the gold market. We will also analyze past examples of break-ups of political and economic unions, including exits from the European Union, to assess the potential impact of Brexit on the price of gold.

Investors have to remember that the referendum was not a formal, legally binding trigger for Brexit, so the United Kingdom is still a member of the EU. Actually, its exit has not been determined yet. And as there are some arguments that Brexit will not happen, there are precedents for countries voting against the EU, but remaining within it after all. In 1992, Denmark vetoed the Maastricht Treaty. Ireland rejected the Nice Treaty in 2001 and the Lisbon Treaty in 2008. In each case, the EU offered some concessions and opt-outs, thanks to which the treaties were ultimately accepted in the following referenda. Therefore, history may repeat itself in the case of the UK, especially when both sides fully realize the consequences of Brexit (some analysts consider them prohibitive). It would be definitely a much less gold-friendly scenario.

However, investors should be prepared for the worst, especially since the lack of a market crash after the referendum lowered the cost of exit. How would Brexit happen? According to the Treaty on European Union, to formally initiate the exit procedure, the UK has to give its notice under (theoretically, the UK could ignore this legal route and simply leave the EU without invoking that clause, but such an option would be even more costly, as it would keep many details of withdrawing from the EU unresolved – this scenario would thus be the best for the gold market). David Cameron did not trigger it and it is still unclear when Theresa May, the new British Prime Minister, will invoke this article, if at all. Then, the EU shall negotiate and conclude an agreement with the UK, setting out the arrangements for its withdrawal and taking account of the framework for its future relationship with the EU. The treaty gives two years to negotiate a withdrawal agreement – and once this time is up, the UK is out with a deal or without one, “unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period”. As one can see, the procedure is not very detailed. There are many unknowns: for example, how and when the UK should make note of its exit. During this process the UK government will have to make many important decisions, including the future of its relationship with the EU. Therefore, we will also analyze the UK’s options are outside the European Union.

In this edition of the Market Overview, we will discuss the relationship between gold and gold stocks. We will examine the historical price movements of the shiny metal and some gold equity indices. We will also analyze the pros and cons of investing in gold stocks when compared to other gold investments. Do you want to know what are the most important gold stock indices and how to benefit from monitoring them? This edition of the Market Overview focuses on the ratios between gold and gold stocks indices, showing how to use them as an investment tool. A relative analysis of bullion to gold stocks can help understand what is happening in the precious metals market.

Before we turn to the main topic, we will briefly address the British referendum on the United Kingdom’s membership in the European Union and its implication for the gold market. Britons decided to leave the EU – so what does it imply for the gold market?

In this edition of the Market Overview, we will discuss the relationship between gold and other precious metals. We will analyze the historical price movements of gold, silver, platinum and palladium. Do you want to know what the ratios between gold and other precious metal prices are and what the normal ranges for them are? Is the gold-to-silver ratio too high, and must return to its historic average of 16? This edition of the Market Overview will answer these questions and show you why these ratios are useful, and how to benefit from them. A relative analysis of precious metals prices often signals bull and bear markets or indicates when to reallocate investment positions between gold and other precious metals.

In this edition of the Market Overview, we will discuss the gold lending and swap market – a misunderstood and overlooked part of the gold market. Are you confused by the talk of gold backwardation, the gold lease rates (GLR) or the gold forward offered rates (GOFO)? This edition of the Market Overview will show you how these gold market-related interest rates and the price of gold interfere with each other. We will also discuss how the gold leasing is conducted, how it is linked to the gold prices, and why gold is leased at all. Last but not least, we will analyze whether the leasing of gold by central banks affects the price of gold, what negative gold forward rates mean, and how to interpret the occurrence of backwardation in gold.

In the July edition of the Market Overview, we wrote that the investment demand drives the gold prices, because only professional investors (not consumers) provoke a stable, sustainable rise (or decline) in the gold prices. A month later, in the August edition, we analyzed the most important motives for investing in gold: hedge against inflation, insurance against financial turmoil and portfolio diversifier. However, we have not examined yet how the investors’ actions actually affect the gold market, so this time, we fill the gap and analyze how the changes in sentiments among gold investors drive the price of gold. We will focus on Comex, which is the largest and the most influential gold futures marketplace in the world (as was shown in March). Additionally, we will also address two other issues our readers often ask about: the impact of ETFs’ flows on the price gold and the way the gold ETFs really work. From this analysis investors should come to understand the gold market and its true drivers (e.g., how motivations of Comex participants affect the gold prices), as well as learn a few practical investment clues, especially how to interpret the COT reports and profit from them.

In the previous editions of the Market Overview, we described the factors driving the price of gold along with the ones that do not affect it. We showed that the gold market is one of the most complicated markets in the world. Indeed, its structure is not very transparent, as gold is traded in many markets all over the word, and the majority of its volume is exchanged in the over-the-counter (OTC) markets. This is why analysis of the structure and mechanics of the gold market is so valuable.

In this edition of the Market Overview, we will examine how the gold market really works and how the price of gold is determined. We will describe the structure of the gold market and how it functions, focusing on the U.S. futures market and the London spot market, the two most important gold marketplaces in the world. From this analysis investors should come to understand the gold market and its true drivers, as well as learn a few practical investment clues.